Luxembourg apartment prices rocketing

HOUSING
Tim Harrup

Apartment prices, and with them no doubt the interest of professional investors, are rocketing in Luxembourg. If we take just two communes which are representative of the ‘top of the range’ in terms of desirability and therefore of price in the Grand Duchy – Luxembourg City and Bertrange – it can be seen that the purchase price of an apartment at the end of last year was a little over 10,000 Euros per square meter for existing buildings, and around 11,500 Euros per square meter for new build. In addition, more than two thirds of the 60 or so communes cited by the ‘Observatoire de l’Habitat’ in its report fall into the range of 4,500 – 7,500 Euros per square meter for existing buildings, and around 10% or more in excess of this for new build, with some exceptions on each side of this percentage.

Another figure which is doubtless of interest to the new breed of professional investors is that in certain of these communes, as reported by the Observatoire and Statec, the average price of an apartment rose by over 14.5% in 2020. The Paperjam report publishes detailed apartment prices per commune based on the sales realized during 2020 >>

It is clear that potential investors in residential property are likely to be far more interested in new build – not just for the price but more particularly because they can get their hands on substantial quantities of apartments all in one place/one building, something which is virtually impossible for existing units. Within this respect, Luxembourg is facing some of the same problems as Brussels. A statement by Delphine Romano of broker Inowai during a recent conference confirms this: “In order to reduce the imbalance between supply and demand, it will be necessary to continue with the efforts allied to the production of new housing, supporting developers by speeding up the permit granting procedures”.

Another figure which underlines the performance of Luxembourg is that the average price rise in Europe for apartments last year was around 5.5%, according to the Trends. To add just a little more perspective to all this, it should not be forgotten that prime office rents in Luxembourg are around twice as high as those in Brussels, and all real estate prices within a given territory tend to have some sort of price link. And finally, it is currently perfectly possible to purchase a new build apartment in the Brussels commune of Uccle (one of the most sought after and expensive of the capital) in the region of 4-6,000 Euros per square meter, or even less.